Effective Branding: How Not to Manage Large & Successful Brands (Lessons from Failing Dutch Retail)

As a Dutchy living overseas, I can’t help but keep track of the news of what’s happening back home. During the Christmas holidays one thing that was shocking to see was the state the Dutch retail landscape is in, several of the largest chains on the brink of bankruptcy, renegotiating debt or already in the process of closing down.

A big lesson in effective branding can be learned here: “Don’t innovate and your brand will die!” Sounds harsh? Unfortunately an inevitable truth of managing any brand over a longer period of time. The speed with which death occurs heavily depends on the speed in which users react to change and the overall competitiveness of the category in which your brand operates.

For many of the big Dutch retailers currently struggling to keep their head above water, this lesson probably comes too late. They have fallen victim to the Darwinian-like principle that also applies to the world of branding; “only the strong survive”. The strong ones in this context are those brands that try new things, able to find new ways to deliver superior value to their shoppers in rapidly changing environments. The weaker ones are those that get too comfortable riding what they see as a “cash cow wave”, without adjusting to changing shopper needs and competitive environments.

Let’s have a look at some of the causes and some possible solutions to what happened to Dutch Retail, and see how learnings apply as well to perhaps some of our Asian clients managing some of the largest, most well-known, iconic local brands, wondering if they should do more of the same to sustain their business, or whether they should innovate to not end up like those Dutch Retailers everyone believed were too big to die.

Issue #1: Irrelevance (links to Brand Concept)
I got so bored going through some of the shops in Holland. In some cases it made me feel like stepping into a time machine and going back to the 80s. The style of clothing for example was boring, the choice of brands unexciting. All nor here nor there. I wished myself back in pretty much any Asian mall during each of my visits to various cities. It’s surprising how some retailers have managed to stay alive this long, selling things the majority doesn’t really care about. What’s the real issue? the concepts behind many of these brands were no longer relevant to a large enough audience.

Solution: Realize your Strategic Audience is in a Constant State of Change
Question: Who is my strategic audience? Answer: always the next generation! Of course it’s true that the entire European continent is aging and the “silvers” (fancy marketing-speak for old folks) are perhaps your biggest segment now, however they will also be the first segment to die! How is your business going to survive when that happens? Of course we don’t suggest to ignore the “silvers”, just always think ahead and focus your strategic efforts to interest that next rising star audience: The young generation. They are the ones that will guarantee your future survival. It’s essential to connect with them early, understand how to add value to them, understand to what competitors and why you might be losing them and adjust your value proposition quickly and accordingly.

Issue #2: Choice (links to Brand Fit)
Let’s look at shopping for fashion or accessories. In the bigger retail chains the purchasing teams decide what is available to buy and unfortunately in many cases they are heading exactly the wrong way.

Try to shop for branded clothes in any but the mayor cities of any European country, how much choice do you really have? The lack of availability doesn’t mean anyone wearing a branded pair of jeans automatically lives only in the capitol cities.. Trying to buy only for the masses results in lazy, unimaginative, arrogant and Jurassic park era buying attitudes that kills retail and allows large outlet shopping areas or online retailers to pop up taking business away. Try getting that business back once it’s gone.

Solution? Apply Smarter Global Purchasing
Here’s a vision: I, the shopper, want every cool, popular or exciting product, from anywhere in the world to be available inside any big department store. That includes that cool lamp made from wax in Indonesia, every cool product sold on kickstarter.com and anything I can find on Amazon!

Buyers.. stop being lazy.. this is the time where you can make a real difference. Massive choice can be a critical driver of delivering superior value to your audience. Now, before you start.. Don’t think about whether you can get it done or not, focus on HOW you can get it done. Don’t say it’s impossible. The shop exists already; it’s called Amazon. What if Amazon would open a brick and mortar chain tomorrow?

Issue #3 Choice does not equal Inventory (links to Business Model Innovation)
The brick-and-mortar version of the Amazon store would do things differently right? Thinking different for modern retailers is essential. You can easily offer much more choice without the need to keep massive inventory! I want to touch, feel and try crazy new products from all over the world in your store and then I’d be happy to wait for a few days for my order to arrive to my house from wherever in the world it is that you need to purchase that from. Globally purchased, ordered on demand, coming to me with a little waiting time if needed. A sacrifice I’ll happily make in return for more choice, new ideas, quicker access to the latest and greatest. How can a department store help me remove barriers for purchasing internationally?

Issue #4: Availability (links to Smarter Distribution & Sales )“If it’s not on the rack we don’t have it any more”. Don’t you just hate that sentence? The words uttered by that uninterested sales lady at the shoe store you forced yourself into, spoken right before she disappeared into the back to dig into that smelly snack she had laying around for a while, giving up on you as a customer before you’ve even left the store.  Annoying right? Finally found something you love and of course it’s not available in your size anymore. Let’s just go home.. I’m done with this!

Solution? Online/Offline connected store inventory
It’s not that difficult right? 1 centralized inventory system, a digital pillar with a scanner to help shoppers check if an item is still in stock anywhere then the option to pay direct via the pillar using your credit card and getting your item delivered to your house the next day at a time convenient to you. If online can do it brick-and-mortar should match, no?

Issue #5: Check it offline, buy it online (links to Business Model Innovation)
I caught myself doing this more than once; shopping for the coolest latest gadgets in brick-and-mortar stores, check the features, touch the real product, then buying the item you like somewhere else online for the lowest price. Do the parents need some new sound? We’ll all go to the shop, check out the latest wireless smart speaker system, hear the sales guy explain it’s fabulous features, listen to the awe inspiring demo’s, before rushing back home and ordering that magnificent device with a 100 euro discount or more from an unknown online retailer. We’re so disloyal aren’t we? I don’t care I just saved a 100 euros!

Solution: Guarantee the lowest price (it’s so simple..)
Sorry brick-and-mortar.. we know those online guys are killing your margins (hurray for the shopper) but thy shallst only survive if thy doeset the same. Don’t ask if you should follow, start thinking about how you can leverage your massive buying power and scale to buy smarter and match those prices. The easiest way to do it if you really cannot match cost? Turn that online competitor into your supplier, order it from them and resell it in your store. It’s called outsourcing!
Why is this so important? Relationship Value! It’s not the single missed sale that will close you down it’s the sum of lost income a customer generates during its lifetime. And they will leave you if you’re consistently more expensive than others.

Issue #6: You’re soooo boring!! (links to Brand Experiences)
Yawn…

Solution: Entertain!
The advantages of having traditional brick and mortar stores are still tremendous, however they are far from fully leveraged. What’s more fun than spending a Saturday afternoon strolling through the mall or your city center. It’s the experience that counts.. People watching, enjoying a snack on the street, combining a visit with a dinner or cinema visit. There’s so much atmosphere, especially during the holiday season, physical shops can always be far more superior to digital shopping and something online retail simply will never be able to copy – build experience into everything (entrance, navigation, store layout, shelf browsing, cross-selling, check-out etc.)

Partner with other retailers to create fun themed city events, decorate shops, maximize the experiences inside the shops, connect unrelated stores with fun cross selling discounts, organize more product demonstrations to push products out, make sure we maximize value added services online retailers cannot match; gift wrapping services, special events in the store.

These are just some of the issues and realities I noticed when I was back home, do you have other examples, other things you dislike when shopping? Post your thoughts in the reply section.

What’s the overall lesson here?
Having a brand and allowing it to stand still inevitably leads to its demise. You might be the only player in a niche, you might have almost no competition, or your competitors are not very strong, but it’s a matter of time. Even in slow, stable markets you must think ahead, prepare for different scenario’s, keep moving, try new things, be quick to adjust, keep in touch with your audience, understand their changing needs, understand who you are competing against and what brands are taking away “share of wallet” from your business. What should change, when should we change.

Most importantly make sure everything connects to 1 unifying strategic goal: deliver more and better superior value. Keep doing that better than competition and your brand will live forever!

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